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Respondent determined a deficiency in petitioners’ 1994
Federal income tax in the amount of $3,451. This case was
submitted fully stipulated, and the sole issue to be decided is
whether petitioners are taxable on any amount of Social Security
benefits received in 1994. Petitioners resided in West Covina,
California, at the time they filed their petition.
Petitioners’ 1994 Federal income tax return reflects
adjusted gross income of $136,094.44. Included in that amount is
$4,898.72, which is 85 percent of $5,763.20, the amount of Social
Security benefits received by petitioner Bernice F. Roberts. In
addition, petitioner Richard S. Roberts (petitioner) received
Social Security benefits in 1994 in the amount of $13,151.
Petitioners contend that no portion of this latter amount is
taxable because petitioner will never recoup his basis under the
85-percent taxability system. Several of the stipulated
exhibits, which respondent objected to as irrelevant and
consisting of hearsay, attempt to demonstrate this fact with
historical calculations of petitioner’s contributions to the
Social Security system and his benefits received. However, as
explained below, the calculation in petitioner’s exhibits of the
amounts of Social Security contributions made and recovered is
irrelevant under the statutory scheme for taxation of such
benefits.
Section 86 was enacted in 1983. Social Security Amendments
of 1983, Pub. L. 98-21, sec. 121(a), 97 Stat. 80. This provision
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Last modified: May 25, 2011